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Putting the wind in Corporates' sails

Despite the actions of some of the world’s most influential business and political leaders, we have a long way to go to achieve a carbon-neutral world. At the Climate Action Summit in September 2019, 65 countries committed to reducing carbon emissions to net-zero by the year 2050. Sadly, these countries only account for about 10% of global emissions. The rest of the world seems to be postponing action as it wrestles with the political ramifications and corporations contemplate potential bottom-line consequences.

It's clear that low-carbon energy systems are urgently needed to mitigate climate risks. At Swiss Re Corporate Solutions we're focusing on helping corporates transition to a net-zero emissions world - and our reputation as a strong partner in the renewable energy ecosystems is growing.

There are several examples which demonstrate our efforts for the development of scalable solutions to mitigate and adapt to climate change. These solutions support the transition to more sustainable, low-emission energy systems by managing the risks associated with renewable energy projects and making them more attractive to investors.

One case in point is a solution that we tailored for a Green Bank in the US. The Bank finances the installation of residential and commercial solar assets through the securitization of Solar Renewable Energy Credits (SRECs).  Investors were concerned about potential hurricane damage to rooftop solar panels which could interrupt SREC securitisation revenues. We were able to give the Bank, and its investors, peace of mind by developing an innovative parametric insurance solution called Windstorm to cover potential losses.

Additionally, we're market leader in insuring wind power  in Asia, Europe and the US. Our roots go back to 2010 from our participation in Global Tech 1 in the North Sea, the largest offshore wind farm at that time. Since then, we've insured more than 60 offshore assets that are providing clean renewable energy to many countries around the world.

And in 2019, we agreed to insure the first commercial offshore wind farm project in France, the St-Nazaire Wind Farm.  Situated off the coast of the Loire-Atlantique region, it will comprise 80 turbines, which will cover 20% of the regions power consumption once in operation. We're providing large capacity for both in the construction and the operational phases of this project.   

I'm proud of our strengths in Asia, a complex region for offshore assets with typhoon exposure, which requires vast expertise but often has scarce capacity due to the volume of projects. This combination of factors can limit insurers' support, but I'm pleased that we've been able to take the lead in many projects, due to our well-established presence and in-depth knowledge.

And as offshore assets growth continues, particularly in Taiwan, one of the most important markets in Asia, we're there to provide solid backing in the form of insurance cover. We've been selected to insure several major projects there. Formosa II, a major project which comprises 47 turbines with a total capacity of 378 MW is one such example. Once complete, it's estimated to displace 18,750 kilotons of carbon dioxide emissions over its lifetime, while powering the equivalent of 380,000 households annually.

A three-pronged approach for sustainability performance

Addressing corporate clients' needs for so-called sustainability performance will be key. We expect demand to strengthen amid growing pressure on companies from stakeholders, governments and regulators to pay more heed to sustainability issues. Together with our corporate clients, we're embracing the risks and opportunities emerging from a much-needed focus on sustainability issues in three ways:

  • Firstly, we're helping safeguard our clients' commitments to sustainability goals.  A great example is the Solar Revenue Put offered in cooperation with kWh Analytics, a market leader in solar risk management in North America. Basically, the Solar Revenue Put is insurance coverage for solar production and revenues and serves as a credit enhancement for solar investors by guaranteeing up to 95% of a solar project’s expected energy output.
  • Secondly, we're able to provide clients with sustainability risk management expertise that goes beyond traditional risk transfer products. This comes in the form of holistic value propositions to help customers better understand their sustainability risks and leverage our parametric capabilities.  
  • Thirdly, when it comes to managing business in sustainable ways, Swiss Re and Corporate Solutions can act as role models for other large corporates. Just two examples in this context are Swiss Re' ESG benchmarking in asset management, and its Sustainability Risk Framework.

But we cannot afford to get caught up in the headlines and soundbites. It's fair to say that COP25 has been a disappointment, but that should only motivate us to work harder and faster. A sense of urgency is imperative. The re/insurance industry is accelerating investment in low-carbon initiatives and proving to be a powerful enabler in mitigating the effects of climate change. Swiss Re Corporate Solutions is acting now – we're ready to help the transition to the zero-carbon economy by advancing Corporate insurance together.

Author

​WEF 2020

Putting our muscle behind the push for net-zero carbon